Bill Campbell invested $5,300 and borrowed $5,300 to purchase shares in Kellogg. At the time of his investment, Kellogg stock was selling for $53 a share. Note: There were no commissions to buy or sell this stock. a. How many shares could he buy if he used his $5,300 and borrowed $5,300 on margin to buy Kellogg stock? Note: Round up your final answer to the nearest whole unit. b. Assuming Bill did use margin, sold his Kellogg stock $58 a share, how much profit did he make on his Kellogg investment? Note: Round up your intermediate value of "Total shares" to the nearest whole unit. Round your final answer to 2 decimal places. a. Number of shares b. Total profit 200✔ $ 5,876.00

Bill Campbell invested $5,300 and borrowed $5,300 to purchase shares in Kellogg. At the time of his investment, Kellogg stock was selling for $53 a share. Note: There were no commissions to buy or sell this stock. a. How many shares could he buy if he used his $5,300 and borrowed $5,300 on margin to buy Kellogg stock? Note: Round up your final answer to the nearest whole unit. b. Assuming Bill did use margin, sold his Kellogg stock $58 a share, how much profit did he make on his Kellogg investment? Note: Round up your intermediate value of "Total shares" to the nearest whole unit. Round your final answer to 2 decimal places. a. Number of shares b. Total profit 200✔ $ 5,876.00

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Todd Winningham IV has $5,700 to invest. He has been looking at Gallagher Tennis Clubs Inc. common stock. Gallagher has issued a rights offering to its common stockholders. Six rights plus $64 cash will buy one new share. Gallagher's stock is selling for $82 ex- rights. a-1. How many rights could Todd buy with his $5,700? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of rights a-2. Alternatively, how many shares of stock could he buy with the same $5,700 at $82 per share? (Do not round intermediate calculations and round your answer to the nearest whole number.) Number of shares b. If Todd invests his $5.700 in Gallagher rights and the price of Gallagher stock rises to $90 per share ex-rights, what would his dollar profit on the rights be? (First compute profit per right.) (Do not round intermediate calculations and round your answer to the nearest whole dollar.) Dollar profit
Peter Gunderson bought 2,000 shares of stock in a transportation company at $45.10 per share. Ten months later he sold the stock at $78.22 per share. If he had to pay his broker a commission of $85, how much profit did Peter make on this investment? Round your answer to the nearest dollar.
Use the given partial stock table round dollar amounts to the nearest cent when necessary. Gary Walters owned 400 shares of stock in general electric. he purchased the shares at a price of $38.05 per share and sold them at the closing price of the stock given in the table. A) ignoring dividends what was Garry's profit or loss on the sales of the stock? B) if his broker charges 2.3% of the total sale price, what was the brokers commission? is this a profit or a loss?
Last year, Julie Johnson bought one share of common stock for $950. During the year, Julie received a $47.50 dividend. Earlier today, she sold the stock for $988. (a) What rate of return did Julie earn on her investment? (b) What were the (1) dividend yield and (2) the capital gains yield associated with holding the stock? Your broker offers to sell you shares of Wingler & Company common stock, which paid a dividend of $2 yesterday. You expect the dividend to grow at a rate of 5 percent per year into perpetuity. If the appropriate rate of return for the stock is 12 percent, what is the market value of Wingler’s stock? Ocala Company’s stock is currently selling for $19.50 per share. At the end of the year, the company plans to pay a dividend equal to $2.34 per share. For the remainder of the company’s life, dividends are expected to grow at a constant rate, and investors are expected to require a 16 percent return to invest in Ocala’s stock. What should be the value of…
Angel bought $20,375 worth of stock on margin and borrowed $4,651 from his broker. What is the percentage margin in Angel's account?
A sophisticated investor, B. Graham, sold 250 shares short of Amwell, Inc. at $31 a share. The price of the stock subsequently fell to $26 before rising to $46 at which time Graham covered the position (that is, closed the short position). What was the percentage gain or loss on this investment? Use a minus sign to enter the amount as a negative value. Round your answer to two decimal places.
Suppose Tyler initially pays $76,000 toward the purchase of $108,000 worth of stock, borrowing the remaining balance from one of notorious brokers, Diego. In this case, Tyler’s initial percentage margin is closest to A. 70.37%. B. 60.50%. C. 39.50%. D. 29.63%. Clear my choice
1) Lisa has a margin account and deposits $2500,000 into it. Assume that the prevailing margin requirement is 50%, interest and commissions are ignored and and XYZ Corp. is selling for $44 a share. a.) How many shares can Lisa purchase using the maximum allowable margin? b.) What is Lisa's profit or loss is XYZ Corp.'s stock i.) Rises to $59 and Lisa sells the stock? ii.) Falls to $32 a share and sells the stock? c.) If the maintenance margin is 30%, what price can the stock fall to before Lisa receives a margin call? 1262 20
Mr. Ramon Sy has 100 SMC shares which he bought costing P13,000. He would like to sell his shares registered under his name at a market price of P136/share. His broker executed the order and the transaction was done during the day. His stockbroker charged the minimum stock broker's fee. How much is the realized gains of Mr. Sy? a. P600.00 b. P455.12 c. P405.80 d. P400.00
You purchased 200 shares of Willy Wonka Chocolates for $20.76 per share. Six months later you sell half your shares for $23.67 per share. A year later you sell the other half for $19.21. Did you make a profit or lose money? How much did you make or lose? Explain your results mathematically.
Lancaster Corporation, an investment banking company, often has extra cash to invest. Suppose Lancaster buys500 shares of Knight Corporation stock at $40 per share, representing less than 5% of Knight’soutstanding stock. Lancaster expects to hold the Knight stock for one month and then sell it.The purchase occurs on December 15, 2018. On December 31, the market price of one share ofKnight stock is $47 per share.Requirements1. What type of investment is this for Lancaster? Give the reason for your answer.2. Record Lancaster’s purchase of the Knight stock on December 15 and the adjustment tomarket value on December 31.3. Show how Lancaster would report this investment on its balance sheet at December 31 andany gain or loss on its income statement for the year ended December 31, 2018
Assume that an investor short-sells 600 shares of stock at a price of $45 a share, making a 50 percent margin deposit. A year later, she repurchases the borrowed shares at $30 a share. How much of her money did the short-seller have to put up to make this transaction?$ How much money did the investor make, or lose, on this transaction? Ignore margin interest.$ What rate of return did she make on her invested capital (see part a)? Ignore margin interest. Round the answer to two decimal places. %

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